An Early Test for Lawmakers

12/27/2006

NY Times Editorial
Published: December 27, 2006


Thanks to the 2001 tax cut law, over the next four years the federal government will forgo some $30 billion so America’s wealthiest taxpayers can claim bigger write-offs for expenses like dependents and mortgage interest. One-third of those tax cuts kicked in this year, with the rest scheduled to take effect in 2008 and 2010. By then, most of the advantage will go to the top 0.3 percent of Americans — those making more than $1 million a year — who have until now been required to limit the amounts they are allowed to claim for things like the spousal exemption or the mortgage costs on a vacation home.


Over roughly the same period, the government is looking at a $14 billion shortfall in its share of financing for a crucial federal-state program that provides health insurance to poor children, the so-called Schip, or State Children’s Health Insurance Program. Without full financing, 1.5 million children will be cut from the program or underserved.


Depriving children of adequate health care while giving the rich tax benefits that were intended for average Americans is flat-out wrong. The new Democratic-controlled Congress must move quickly to prevent that. When it convenes in the new year, Congress should pass a law to freeze the tax write-offs at 2007 levels. That will not cause anyone’s taxes to rise. But it would free up the money that is needed for children’s health insurance.


It would also be an early sign that the new Congress is more in touch with current economic reality than its Republican-led predecessor. When the bolstered write-offs were enacted in 2001 the nation was still flush with the Clinton-era budget surpluses. And while we never supported the notion that tax cuts for the rich were an appropriate way to use the surplus, those championing the cuts could at least make the argument (quickly proved wrong) that the nation could afford it.


Since then, the budget surpluses have disappeared, the nation has gone to war, government services have been cut deeply and the percentage of uninsured children has started to rise again, after declining in every year since 1998. The children urgently need to win this one, and only the new Congress can help them.